NEW DELHI — India’s government is considering expanding the official startup definition to include deep-tech ventures and cooperatives, a move announced Wednesday that could widen access to policy benefits and funding for emerging enterprises. The proposed change would also allow startups to pivot into deep-tech sectors without losing their recognized status, according to a government official.
What Changes Are Being Considered
The Department for Promotion of Industry and Internal Trade (DPIIT) currently defines startups as entities less than ten years old with annual turnover below INR 100 crore, focused on innovation and development of products or services. The expanded framework would formally recognize deep-tech startups working in capital-intensive fields such as artificial intelligence, semiconductors, space technology, climate technology, biotechnology, and quantum computing.
Cooperatives including farmer producer organizations, rural innovation collectives, and community-led technology enterprises would gain access to the startup ecosystem for the first time. Over 2 lakh entities are currently registered as startups with the commerce and industry ministry.
Timing and Budget Context
The announcement comes days before Finance Minister Nirmala Sitharaman presents the Union Budget 2026-27 on February 1. The government aims to incentivize more companies to innovate and take risks in advanced technology sectors requiring longer development timelines and higher capital investment compared to conventional tech startups.
Deep-tech ventures typically require extended innovation cycles. Industry stakeholders have pushed for extending DPIIT startup recognition from 10 years to at least 15 years for deep-tech companies.
Access to Government Support Programs
If implemented, the changes could grant deep-tech startups and cooperatives access to government initiatives including the Fund of Funds for Startups, which has a corpus of INR 10,000 crore. The government announced a new Fund of Funds Scheme with another INR 10,000 crore corpus in January 2025.
The Credit Guarantee Scheme for Startups (CGSS) provides collateral-free loans up to INR 5 crore for eligible startups, with coverage ranging from 50% to 85% depending on loan size and borrower category. The scheme offers 75% coverage on credit facilities up to INR 150 lakh. Recent reforms raised the guarantee limit to INR 20 crore with reduced fees for 27 Champion Sectors.
India’s Startup Ecosystem Growth
India has emerged as the world’s third-largest startup ecosystem, with over 120 unicorns and nearly half of new DPIIT-recognized startups now originating from Tier-II and Tier-III cities. The ecosystem has grown from fewer than 500 startups in 2014 to over 2 lakh today.
Prime Minister Narendra Modi marked National Startup Day on January 16, participating in a programme at Bharat Mandapam, New Delhi, to commemorate a decade of the Startup India initiative launched in 2016. During the event, Modi interacted with members of India’s startup ecosystem and addressed the government’s vision for the next phase of innovation-led growth.
About 48% of Indian startups are based in Tier-II and Tier-III cities, according to government data, demonstrating the geographic spread of entrepreneurship beyond metros. Bengaluru remains the startup capital, attracting the largest share of investments, followed by Mumbai and Delhi.
Deep-Tech and Cooperative Challenges
Deep-tech startups face unique challenges including longer research and development timelines, higher capital requirements, and difficulties moving from prototype to product. Analysts predict deep-tech funding could double in 2026, but the sector still receives a disproportionately small share of capital compared to fintech and consumer tech.
Cooperatives in India have historically faced government interference, poor infrastructure, and mismanagement, limiting their ability to compete with large private enterprises. Bringing them under the startup framework could provide access to modern funding mechanisms, tax benefits for three consecutive years, and regulatory easing.
The recognised startups under DPIIT have created over 21 lakh jobs across the country. As of October 2025, AIFs supported under the Fund of Funds Scheme have invested INR 20,572.14 crore in startups.
State-Level Deep Tech Initiatives
Tamil Nadu launched a Deep Tech Startup Policy 2025-26 in January, backed by INR 100 crore investment, aiming to support 100 deep tech startups over five years. The policy features a staged financing model calibrated to Technology Readiness Levels, offering multi-year R&D grants, commercialization support, and scale-up funding.
The government also announced a Research Development and Innovation (RDI) Scheme Fund with an outlay of INR 1 lakh crore over six years, with INR 20,000 crore allocated for FY 2025-26.
